Should employees be paid to stay healthy? Companies look to incentives to control benefit costs

Cory Olsen | The Grand Rapids PressYMCA aquatics director Joe Edger helps weigh staff member Kelly Wass at the David D. Hunting YMCA in Grand Rapids. This year, many employees may step on the scale in an effort to lose weight and gain extra cash or lower health insurance premiums.

These days, being the “biggest loser” at work is a good thing, at least when it comes to weight.

With employers increasingly offering financial incentives to boost participation in programs that improve health and control benefit costs, workers who drop a few pounds could gain extra cash or lower health care premiums.

Employers have long used pay raises and bonuses to boost employees’ work performance, and a recent survey shows 27 percent of large employers with increasingly popular health management programs are now offering more substantial incentives to workers who participate in them.

A study by leading benefit consulting company Mercer shows three years ago a “token” gift of a water bottle, gift card or hat was the most common incentive for workers to finish a health risk assessment.

Now, it’s an average $75 cash bonus or an average reduction of $180 in premium contribution.

“There’s only so much more they can continue to shift (health benefit costs) to the employees,” said E.J. Pearson, a local consultant with Mercer. “There is a direct correlation between good health and people not missing time from work and health benefit costs.”

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According to the National Institutes of Health, studies show excess fat around the waist increases risk for health problems. Data also show more than 23 million Americans have diabetes that annually results in $116 billion in medical costs and $58 billion in costs due to disability, work loss and premature death. Studies show risk of developing diabetes can be reduced with improved diet and physical activity.

In addition, cigarette smoking — which accounts for one in five deaths, 87 percent of lung cancer deaths and at least 30 percent of all cancer deaths each year — is the greatest preventable cause of premature death in the U.S. Those who quit before age 50 cut in half their risk of dying in the next 15 years.

THE RISING COST OF HEALTH INSURANCE BENEFITS

Results of responses from 97 Michigan employers who participated in the Mercer 2010 National Survey of Employer-Sponsored Health Plans:

• Total health benefit cost for active employees increased 5.3 percent in 2010, to an average of $10,738 per employee.

• Asked about their 2011 costs, respondents estimated that if they made no changes to their current plan (other than as required), cost would rise by 9.9 percent.

• 40 percent of respondents will shift cost to their employees in 2011 by raising deductibles, copays/coinsurance or out-of-pocket maximums. In addition, 60 percent will increase employees' share of the premium contribution, and 19% will increase employee cost-sharing some other way.

• Nationally, the median PPO in-network deductible is $1,000 for all employers, but just $500 for large employers. The median deductible for all employers in the Midwest region is $1,000.

Source: Mercer Health & Benefits LLC

Rising benefit costs has led to a decade-long resurgence in employers using health management programs, Pearson said.

“Wellness programs were popular way back in the ’70s and ’80s and then they kind of declined in popularity as health insurance increases were flat,” Pearson said. “In the mid-2000s, we saw a huge spike as employers started to see the value (of wellness programs).”

But, Pearson said, employers save money only if workers participate, which is why many are using money to entice employees to join.

Local participation

Some companies, such as Grand Rapids-based DP Fox, which operates Fox Motors car dealerships throughout the state and the Grand Rapids Griffins hockey team, are turning to outside companies for help.

In 2011, DP Fox employees can team up to participate in the Michigan Matchup weight-loss challenge that offers $18,000 in cash prizes for workers and to win a donation to a local charity on behalf of the company. Participants also get $100 if they reduce their body mass index (BMI) from 30 to below 25 in a year.

In the competition, loosely patterned after NBC’s “Biggest Loser” reality television weigh-loss challenge, teams of five compete from Jan. 7 to April 15.

“It’s the only way you can start controlling your health care costs, if your employees see that the reason why our health care costs are going up every year is those employees that aren’t taking care of themselves are causing our claims to go up,” said Sherri Menard, DP Fox human resources director.

Menard hopes the Matchup will piggyback on DP Fox’s current efforts to improve employee health, which includes offering a Priority Health insurance plan with lower co-pays and deductibles to employees that agree to try to reach recommended health benchmarks and requirements.

Organized by HealthWage, the Michigan Matchup is a statewide company-versus-company weight-loss competition modeled after a successful program in Minnesota, where companies such as Target and General Mills competed.

Michigan Matchup spokesman David Roddenberry said Minnesota employees who participated lost around 5 percent of their body weight.

“The team concept, coupled with the cash incentive, has been very successful,” Roddenberry said.

ABOUT THE MICHIGAN MATCHUP

What? Organized by HealthWage, the Michigan Matchup is a statewide company verse company weight loss competition modeled after a successful program in Minnesota where companies like Target and General Mills competed.

When is it? From January 7-April 15

How dow it work? Participants have their weight verified at local health clubs at the start and end of the competition. They compete in teams of 5 and have access to online tools that help support them losing weight. There are conference calls with fitness and nutrition celebrities each week.

What's the prize? Winning teams of 5 get $18,000 in cash prizes - $10,000 for first, $5,000 for 2nd; and $3,000 for third. All participants get $100 if they go from a BMI of 30 to a BMI below 25 1-year later

How much does it cost? $50 per person ($12.50/month for 4 months) for participants whose employer is participating. Members of the community can participate at $60 per person. Employers pay $2 per employee that participates.

Who can participate? The contest is limited to Michigan residents and online enrollment starts December 15. Visit www.healthywage.com